Thoughts on Purchase this Property

[Jason DiDonato]

I've been looking at a property that is a single family home located in a C- neighborhood but the town is taking large strides in redeveloping it's downtown and I think there will be significant growth potential in 12-15 years.  The property itself is looking to get about $215K for the home and is currently rented out until April of 2026 to company that services individuals with special needs.  It has been recently rehabbed but would need a new roof and my target goal would be $205K with roof in rehab included in price.  My cap rate is 9.66% due to lease payment and significantly low interest rate on private funding.  My hesitation is the location.  At the end of the 2026 lease agreement I'm worried they would not want to sign another 5 year lease and I would be stuck with a property that wouldn't have increased in value significantly and in a market that I couldn't get the same rental rate.  There may be potential for a mid term rental in this location that could help bridge the gap.  I welcome thoughts on pros and cons in this situation in a C- neighborhood.

Thanks!